As El Paso Energy sets about to become the biggest and best inpractically every sector of the natural gas and electric industry,its key gas pipeline subsidiary – El Paso Natural Gas – hasdistinguished itself on another front: it holds the record at FERCfor the most complaints filed against a single company.

The latest complaint comes from Northwest Pipeline Corp., whichhas accused El Paso of violating the Gas Industry Standards Board’s(GISB) standards pertaining to confirmation deadlines andconfirmation quantities.

Specifically the complaint, which was filed Jan. 25, accuses ElPaso of making adjustments to confirmed amounts scheduled to flowbetween the two systems “after” the confirmation deadline, creatingscheduled quantity discrepancies for shippers on Northwest.Northwest contends El Paso’s practice violates GISB standardsrequiring connecting pipelines to make the necessary revisions toconfirmed amounts (either due to capacity constraints, confirmingparty reductions and/or associated balancing cuts) “prior” to theconfirmation deadline.

El Paso’s alleged flouting of GISB standards has taken its tollon Northwest shippers, the Williams’ pipeline said. It cited ahypothetical situation to underscore the impact of El Paso’sactions on Northwest shippers: shipper A on Northwest seeks totransport 12,500 Dths to shipper B on El Paso; both Northwest andEl Paso send confirmations to each other for that amount prior tothe confirmation deadline, but after the deadline (when El Pasomakes adjustments for confirming party reductions and otherfactors), El Paso sends Northwest another confirmation for areduced amount – 7,500 Dths. “El Paso’s failure to comply with theGISB standards results in a negative financial impact to shipper A[who has] paid both its upstream supplier and Northwest based uponthe scheduled quantity of 12,500 Dths on Northwest,” but who wasreimbursed by shipper B on El Paso only for 7,500 Dths.”Essentially shipper A has 5,000 Dths of unaccounted for gas thatit cannot do anything with until the pipelines agree what thescheduled quantity should be,” Northwest told FERC.

As a temporary fix, Northwest said it agreed to adjust itsscheduled quantities to match those of El Paso’s between November1998 and June 1999. But afterward it told El Paso that it wouldhave to comply with the GISB standards. “As of the date of thiscomplaint, even though Northwest has talked with El Paso onnumerous occasions each month…, El Paso has failed to comply andis still basing its scheduled quantities on confirmations submittedafter the GISB confirmation deadline,” Northwest noted.

Northwest said it has received “numerous complaints” from itsshippers regarding the scheduled quantity discrepancies with ElPaso. It has on occasion since last June created shipper imbalanceson its own system to resolve the discrepancies, Northwest noted. Infact, it estimated that scheduled quantity discrepancies owing toEl Paso’s alleged failure to comply with GISB standards were about110,000 Dths in December alone.

Northwest said it sought the help of the FERC EnforcementHotline last October, but was told it couldn’t address Northwest’sproblem because of the ongoing complaint that Amoco Production andothers had filed against El Paso for its capacity-allocationpractices. Even though FERC issued an order on the complaint in theAmoco vs. El Paso case in November, the Enforcement Hotline stillrefused to take up Northwest’s problem, according to Northwest.

After being rebuffed first by El Paso and then by theEnforcement Hotline, Northwest said it had no other choice but tofile its complaint. The complaint asks the Commission to order ElPaso to comply with the GISB standards by honoring theconfirmations that it sends prior to deadline. Also, it wants theCommission to order El Paso to calculate the scheduled quantitiesbetween the two pipeline systems dating from June 1, 1999 forward,based upon the confirmations El Paso sent to Northwest prior to theconfirmation deadlines.

Northwest said it couldn’t “readily quantify [the] financialimpacts or burdens” that El Paso’s alleged GISB violations havecaused for its system, but it noted it has resulted in the”devaluation of Northwest’s capacity” because of the uncertaintysurrounding the delivery of gas to and receipt of gas from El Paso.”Northwest has also had to commit personnel resources to try andresolve this matter as well as to address its customers’dissatisfaction.”

The complaint revisits a similar case where Northwest sought tohave after-the-deadline confirmations imposed on PG&E GasTransmission-Northwest in order to accommodate the scheduling of anupstream Canadian pipeline that wasn’t subject to the GISBstandards. Although FERC was “sympathetic” to Northwest’s plight,it held there was nothing in the GISB standards that requiredPG&E GT-NW to meet Northwest’s request for a later confirmationschedule.

Northwest believes that decision should apply here. “There isnothing in the GISB standards, in the Commission’s regulations orin Northwest’s tariff that requires Northwest to accommodate ElPaso’s late confirmations,” it said.

Susan Parker

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